Rakuten to delay start of wireless network service until April

Shares in Japanese internet firm Rakuten fell 6% on Friday after media reports that it is pushing back the commercial launch of its wireless carrier service by six months because of delays in building the network.

Rakuten will offer services to just 5,000 customers without charge from October, the original date for the full rollout, Nikkei and other Japanese media reported without citing sources. The reports said the commercial launch would take place next spring.

Rakuten did not respond to a request for comment.

A delay would mark a major setback to billionaire founder and Chief Executive Hiroshi Mikitani’s ambitions to shake up Japan’s telco market.

The unproven new network has been an industry talking point with analysts saying the technology, if successful, could lower barriers for new entrants in other markets.

Rakuten says it has radically cut the cost of building a new network by using cloud-based software and commoditized hardware instead of proprietary wireless radios.

However, it has run into delays constructing the network’s base stations and has been told by Japan’s telecoms ministry to accelerate the build-out.

Rakuten last month reported an unexpected operating loss for the April-June quarter, as it invested heavily in the wireless network and took a hit from the depressed value of its stake in ride-hailing firm Lyft Inc.

A delay in the wireless network launch would relieve potential downward price pressure on its larger incumbent rivals NTT Docomo, KDDI and SoftBank Corp. Rakuten has a roaming agreement with KDDI to help fill its coverage shortfall.

In a note ahead of the reports on the wireless network delay, Jefferies analyst Atul Goyal said Rakuten “lacks the financial, technical, manpower resources to compete” with the big three incumbents.